Tag: pandemic market volatility assistance program

Additional Pandemic Payments Announced after Months of NMPF Advocacy

Posted on by Theresa Sweeney

The National Milk Producers Federation (NMPF) commended Agriculture Secretary Tom Vilsack and leading congressional dairy advocates on Jan. 23 for providing $100 million in additional, targeted payments under the Pandemic Market Volatility Assistance Program. The assistance will aid medium-sized and larger producers who missed out on equitable payments during the first round of assistance in 2021 and comes after nearly a year-and-a-half of NMPF effort in tandem with congressional allies.

“While losses due to the combination of unforeseen market circumstances and an inadequate Class I pricing system have not been fully remedied, USDA and congressional efforts will aid thousands of dairy producers who otherwise would have absorbed losses created by policies that didn’t work for them,” said Jim Mulhern, president and CEO of NMPF. “It’s not every day that lawmakers step up and resolve a problem that could have been left to lie. We never gave up, and we’re pleased that others didn’t either.”

NMPF singled out for praise, along with Vilsack, Reps. Sanford Bishop (D-GA); Jim Costa (D-CA); David Valadao (R-CA); Kat Cammack (R-FL); Josh Harder (D-CA); Kim Schrier (D-WA); and Andy Harris (R-MD) as well as Senators Dianne Feinstein (D-CA) and Patty Murray (D-WA) for their efforts, which directly reflect their dedication to the dairy farmers who live in their districts and nationwide. “The leadership of these lawmakers, and others, were critical in ensuring that available USDA funds were directed toward their best use – making life fairer for dairy farmers,” Mulhern said. “It’s heartening to see such effective leadership for our industry on Capitol Hill as well as in the administration.”

In this round of payments, USDA’s Agricultural Marketing Service (AMS) will make PMVAP payments to eligible dairy farmers for fluid milk sales between 5 million and 9 million pounds from July through December 2020. This level of production was not eligible for payment under the first round of the PMVAP, which capped payments at 5 million pounds during that same period. Payment rates will be identical to the first round of payments, which distributed $250 million in assistance to 25,000 dairy farmers. This new round of payments will be made using the $100 million that remained unspent from the initial round.

USDA will again distribute monies through agreements with independent handlers and cooperatives, with reimbursement to handlers for allowed administrative costs. USDA will contact handlers with eligible producers to notify them of the opportunity to participate. More details on the program were included in an NMPF Member Alert sent on Jan. 24.

NMPF will continue in its efforts to remedy losses among dairy farmers of all sizes, as well as for those farmers unable to receive program funds because their milk was not pooled on a Federal Milk Marketing Order but still endured comparable price losses.

NMPF Applauds Additional Pandemic Market Volatility Assistance Program Payments

Posted on by Theresa Sweeney

The National Milk Producers Federation (NMPF) commended Agriculture Secretary Tom Vilsack and leading congressional dairy advocates for providing $100 million in additional, targeted payments under the Pandemic Market Volatility Assistance Program that will aid medium-sized and larger producers who missed out on equitable payments during the first round of assistance in 2021.

“While losses due to the combination of unforeseen market circumstances and an inadequate Class I pricing system have not been fully remedied, USDA and congressional efforts will aid thousands of dairy producers who otherwise would have absorbed losses created by policies that didn’t work for them,” said Jim Mulhern, president and CEO of NMPF. “It’s not every day that lawmakers step up and resolve a problem that could have been left to lie. We never gave up, and we’re pleased that others didn’t either.”

NMPF singled out for praise, along with Vilsack, Reps. Sanford Bishop (D-GA); Jim Costa (D-CA); David Valadao (R-CA); Kat Cammack (R-FL); Josh Harder (D-CA); Kim Schrier (D-WA); and Andy Harris (R-MD) as well as Senators Dianne Feinstein (D-CA) and Patty Murray (D-WA) for their efforts, which directly reflect their dedication to the dairy farmers who live in their districts and nationwide. “The leadership of these lawmakers, and others, were critical in ensuring that available USDA funds were directed toward their best use – making life fairer for dairy farmers,” Mulhern said. “It’s heartening to see such effective leadership for our industry on Capitol Hill as well as in the administration.”

In this round of payments, USDA’s Agricultural Marketing Service (AMS) will make PMVAP payments to eligible dairy farmers for fluid milk sales between 5 million and 9 million pounds from July through December 2020. This level of production was not eligible for payment under the first round of the PMVAP, which capped payments at 5 million pounds during that same period. Payment rates will be identical to the first round of payments, which distributed $250 million in assistance to 25,000 dairy farmers.

USDA will again distribute monies through agreements with independent handlers and cooperatives, with reimbursement to handlers for allowed administrative costs. USDA will contact handlers with eligible producers to notify them of the opportunity to participate.

NMPF will continue in its efforts to remedy losses among dairy farmers of all sizes, as well as for those farmers unable to receive program funds because their milk was not pooled on a Federal Milk Marketing Order but still endured similar price losses.

NMPF Funding Priorities Advance in House Appropriations Measure

Posted on by Theresa Sweeney

The House Appropriations Committee passed its Agriculture-FDA spending bill for Fiscal Year 2023 on June 23, the first congressional move toward enacting spending for next year’s federal budget. NMPF is remaining active in advocating for dairy as appropriations moves forward, working for more funding for dairy producers of all sizes in the Pandemic Market Volatility Assistance Program and additional members to assist farmers. Highlights for dairy producers include:

  • Nutrition – The measure continues to fund at $3 million the Healthy Fluid Milk Incentives Projects authorized in the 2018 Farm Bill to create pilot programs to increase milk consumption among SNAP households.
  • Dairy Innovation – The measure provides $25 million for the Dairy Business Innovation Initiatives program, which provides direct technical assistance and grants to dairy businesses to further the development, production, marketing, and distribution of dairy products. This is the same level of funding enacted for fiscal year 2022.
  • Broadband – The measure includes $450 million for the ReConnect program, the USDA Rural Development program working to provide broadband service to eligible rural areas.
  • Farm Stress – The measure allocates $10 million for the Farm and Ranch Stress Assistance Network, a USDA program aimed at connecting those working in agriculture to stress assistance and support programs.
  • Standards of Identity – Noting concern with FDA’s failure to enforce dairy standards of identity, the committee report repeats previous language pointing to FDA’s current process regarding plant-based product labeling and calling on FDA to continue working toward enforcement.
  • Dairy in WIC – The committee report also highlights the repeated finding in the Dietary Guidelines for Americans that dairy foods are both nutrient-dense and underconsumed, including among the WIC-population, in the report’s discussion of FNS updating its food allowance for the WIC program.

NMPF also worked with several members, including House Agriculture Appropriations Subcommittee Ranking Member Andy Harris (R-MD) and Reps. David Valadao (R-CA) and Josh Harder (D-CA), to give priority to NMPF’s request for additional funding for USDA’s Pandemic Market Volatility Assistance Program to further support those farmers who were impacted by the program’s five-million-pound limitation. Subcommittee Chairman Sanford Bishop (D-GA) committed to working with those lawmakers to address this issue as the bill advances.

The House is expected to pass its appropriations measures before members return home for the August in-district work period, with the Senate expected to release its bills this summer. NMPF will continue building bipartisan support for dairy programs and issues as the appropriations process moves forward, working to ensure the continuing advancement of the priorities of dairy farmers and the cooperatives they own.

Pandemic Market Volatility Assistance Program Payments Are on Their Way

Posted on by Theresa Sweeney

Through the Pandemic Market Volatility Assistance Program (PMVAP), USDA will provide up to $350 million in pandemic assistance payments to dairy farmers early this year. This initiative will partially reimburse producers for unanticipated losses created during the COVID-19 pandemic when federal dairy food box purchases weighted heavily toward cheese, combined with a change to the Class I mover formula created the unintended consequence of significant financial losses.

Payments will reimburse qualified dairy farmers for 80 percent of the revenue difference per month on up to 5 million pounds of milk marketed and on fluid milk sales from July through December 2020. The payment rate will vary by region based on the actual losses on pooled milk related to price volatility. As part of the program, handlers also will provide virtual or in-person education to dairy farmers on the program and other dairy topics.

What are the eligibility requirements?

Producers who ship to handlers, including cooperatives, and are regulated under the Federal Milk Marketing Order (FMMO) system will be eligible for PMVAP reimbursements if their average Adjusted Gross Income (AGI) is less than $900,000 or if 75 percent of their AGI comes from farming and ranching activities.

How are payments calculated?

The amount of money from USDA due to a cooperative is determined by the volume of the cooperative’s milk regulated by the FMMO during July to December 2020. The monthly payment rate during that time is 80 percent of the difference between the previous and the current Class I price formulas. Because prices change every month and there are 11 FMMOs, USDA is using 66 different payment calculation rates to determine how much money is due to producers.

Many variables affect an individual producer’s actual payment. A program-wide, uniform producer payment rate is impossible because so many variables go into a producer’s payment.  And significantly, eligible milk per producer or farm entity is limited to 5 million pounds of milk marketed, or 833,000 pounds per month during the period of July through December 2020. Milk produced beyond this cap is not eligible for payment. Other variables include:

  • Total pounds of pooled milk
  • Producer AGI eligibility
  • Producer participation declination
  • Applicable Order-specific monthly rate
  • How a cooperative originally paid its producers

USDA is working closely with cooperatives and other handlers to determine producer payments based on the factors described above. In addition, USDA will verify that each handler made producer payments correctly.

How and when will money be distributed?

USDA is establishing individual agreements with cooperatives and other handlers, who are responsible for paying dairy farmers. Once a handler receives their PMVAP payment from USDA, they have 30 days to disburse monies to producers. USDA anticipates that eligible dairy farmers will receive PMVAP payments during the first quarter of 2022.

What’s next?

Significant issues remain with how payments are distributed, making additional funding necessary to close gaps in the program, which arose from the efforts of NMPF and its member cooperatives but fell short of what the organization advocated. Caps on the production amount covered by the program will limit assistance in ways that create inequitable outcomes among dairy producers. NMPF is engaged in efforts with Congress to remedy this shortfall. At the same time, NMPF is continuing discussions about the Class I mover to end the disproportionate risk borne by dairy farmers under the current formula that creates disorderly market conditions.

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More Work Begins When New Dairy Programs Take Effect

Posted on by Theresa Sweeney

Achieving policies that benefit the nation’s dairy farmers is one of the most gratifying parts of working on their behalf. Since the COVID pandemic began in 2020, there has been no shortage of federal acronyms – CFAP, PPP, EIDL, etc. – for programs to help family farms through difficult times. But these initiatives are also complex and imperfect, which is why once a program takes effect, the work has often only begun.

In dairy, USDA is currently implementing two important new initiatives – the Dairy Donation Program or DDP and the Pandemic Market Volatility Assistance Program or PMVAP – while another major program, Dairy Margin Coverage, prepares for 2022 signup. Even as we’re still working to improve them, it’s crucial over the next few months that the dairy community understand and benefit from these programs. As always, we at NMPF will do our best to both lead and assist as these important initiatives roll out.

The Dairy Donation Program, enacted by Congress late last year, represents a very important advance for the industry. We’ve been proud to shepherd it through the legislative and regulatory process, from proposing the initial idea to encouraging its use for all forms of dairy products, a change from the previous Milk Donation Reimbursement Program, which provides limited reimbursements for certain fluid milk product donations. We’re now actively working to help implement DDP, both through our partnership with Feeding America and by informing our members about the program on everything from how to set up relationships between dairy cooperatives and vendors to the ins and outs of how some processing costs will be covered.

It’s important to remember that donations can be reimbursed retroactive to Jan. 1, 2020, and that for now, only the first $400 million of donations will be compensated, making it smart to begin relationships with food banks and other charities that can receive and donate dairy foods. Although USDA expectations are that the full amount of funding will be used over several years, the sooner we demonstrate the benefits of DDP by exceeding USDA’s expectations, the earlier will be able to work to pursue additional resources.

Strengthening ties between dairy community farmers and the cooperatives they own with those helping families who will benefit by receiving dairy products is a great win-win, as it supports the resilience of our communities and ensures that everyone benefits from nutritious dairy products.

The Pandemic Market Volatility Assistance Program (PMVAP) is an important – if still incomplete — gain for dairy. We worked closely with USDA to demonstrate that last year’s price volatility harmed farmers and required a remedy, and PMVAP is an important first step toward recouping the $750 million farmers lost because of the 2018 Farm Bill’s change to the Class I mover that needs to be followed by an eventual fix to the mover itself. It wouldn’t have happened without months of careful consultation between NMPF and USDA that led to the program, which restores $350 million of those losses.

That amount, to be sure, doesn’t fully address the past losses, nor does it prevent future shortfalls. Nor does the program’s approach to allocating funds adequately account for differing farm sizes or regional impacts. But for all its faults, it’s important that farmers and cooperatives maximize PMVAP’s benefits, even as we work with advocates in Congress to obtain additional assistance. Milk handlers who will distribute the funds are already in discussion with USDA on how to do it, and farmers should receive payment during this year’s fourth quarter. Meanwhile, we are working with our members to secure the necessary improvements, and our Economic Policy Committee is discussing a more fundamental fix to various FMMO issues, including the Class I problem itself.

Finally, farmers should be on the lookout over the next few weeks for information on 2022 signup for the Dairy Margin Coverage program, the main federal safety net for dairy farmers that arose from efforts we and the dairy community made to improve assistance in the 2018 farm bill. DMC has something for every producer – inexpensive catastrophic-level coverage for larger producers and cost-effective margin insurance for everyone’s first five million pounds of milk annually. For this year’s signup, USDA improvements to the feed-cost formula and the use of updated production data – both of which fulfill longstanding NMPF goals – make the already compelling case for DMC even stronger, with payments that this year so far are averaging out to 7 percent more than they otherwise would have been just from the alfalfa-price adjustment alone.

Working to strengthen dairy farmers is why we’re here, and we’re proud of these gains. But the puzzle pieces are many, and the picture isn’t complete until they’re properly put together. We’re excited to help our members and the dairy community with assembly over the next several months, and beyond.

New USDA Program Addresses Class I Shortfall, But Work Remains

Posted on by Theresa Sweeney

NMPF’s reaction was mixed toward USDA’s new Pandemic Market Volatility Assistance Program, announced Aug. 19. While the initiative, which will distribute $350 million in assistance payments to dairy farmer, arose from NMPF and member-cooperative advocacy, significant issues remain with how payments are distributed, making improvements necessary.

Under the program, USDA will reimburse producers for unanticipated losses created during the COVID-19 pandemic prompted by a change to the Class I fluid milk price mover formula that put price risks disproportionately on the backs of farmers, burdens which were increased by the government’s pandemic dairy purchases last year. Still, caps on the production amount covered by the program will limit assistance in ways that create inequitable outcomes among dairy producers.

The plan “is an initial step in this effort that will help many producers, but it unfortunately falls significantly short of meeting the needs of dairy farmers nationwide,” said NMPF President and CEO Jim Mulhern in a statement the day of the announcement.

Congress’s change to the previous Class I mover in the 2018 Farm Bill was never intended to hurt producers, and in fact was envisioned to be revenue neutral. However, the government’s COVID-19 response created unprecedented price volatility in milk and dairy-product markets that produced disorderly fluid milk marketing conditions. Those disruptions thus far have cost dairy farmers nationwide more than $750 million when compared to what they would have been paid under the previous system.

The new USDA program will reimburse qualified dairy farmers for 80 percent of the revenue difference per month on up to 5 million pounds of milk marketed and on fluid milk sales from July through December 2020. The payment rate will vary by region based on the actual losses on pooled milk in each order.

NMPF has been working on approaches to right this unintended wrong to dairy farmers by recouping as much of the loss as possible.

“The arbitrary low limits on covered milk production volume mean many family dairy farmers will only receive a portion of the losses they incurred on their production last year,” NMPF President and CEO Mulhern. “These losses were felt deeply by producers of all sizes, in all regions of the country, embodying a disaster in the truest sense of the word. Disaster aid should not include limits that prevent thousands of dairy farmers from being meaningfully compensated for unintended, extraordinary losses.”

Additional work lies ahead to remedy this shortfall more fully for all dairy producers. “We very much appreciate USDA’s persistence and efforts to find a way to cover some of these losses using existing authorities, but NMPF represents producers from all regions and of all sizes and believes that losses incurred by producers must be addressed equitably,” Mulhern said. NMPF will work with Congress to seek supplemental funding to close this gap.

NMPF also is continuing discussions about the current Class I mover to prevent a repeat of this problem.

NMPF Pursuing Needed Fixes on Disaster Assistance and Class I Mover

Posted on by Theresa Sweeney

Dairy farmers welcomed assistance from USDA in August via the new Dairy Donation Program, which NMPF championed through the legislative process; adjustments to the Dairy Margin Coverage program; and the new Pandemic Market Volatility Assistance Program, which will partially reimburse farmers for losses that arose from how the department approached dairy purchases for food-insecure families in 2020. These initiatives will help farmers during difficult times, and they happened because NMPF worked closely with USDA and Congress to help dairy farmers better manage their risks and serve their communities.

That doesn’t mean our work is over – especially on the pandemic market program. The $350 million in reimbursements is a partial balm that begins to redress policies that created unintended harm. But it isn’t a fair deal for all dairy farmers. NMPF is committed to lead efforts for fairness on behalf of our members.

Some background: USDA’s new program attempts to rectify two policy actions that left many in dairy on the wrong end of unplanned consequences. The immediate trigger was government food-box program purchases that were heavily weighted toward cheese. That over-emphasis sent Class III cheese prices to all-time highs and caused unusual and uneven impacts on milk checks, most commonly noticed via the record negative Producer Price Differentials (PPDs) seen during the pandemic.

The other culprit was an attempted good-faith policy change that inadvertently became a ticking time bomb, exploded by those same milk-price gyrations. A change to the Class I mover formula, which sets the price of Class I fluid milk, in the 2018 farm bill was originally proposed as a revenue-neutral adjustment designed to encourage increased fluid milk sales without hurting farmers. It turned out to be anything but that. Last year’s unprecedented discrepancies between Class III and Class IV prices, which are used to calculate the mover, pushed Class I skim milk prices dramatically lower than they would have been under the previous formula, leaving dairy farmers with roughly $750 million in losses.

At NMPF, we repeatedly urged the government to make more balanced purchases last year because we feared that unbalanced dairy-buying would wreak havoc on markets, as it did. Subsequently, when the effects of the new Class I mover formula became clear, we voiced support for an emergency Federal Milk Marketing Order hearing focused specifically on addressing the problem. We have held back on a formal hearing request, choosing instead to work with USDA toward creative solutions to more quickly assist producers, such as the new pandemic program. With USDA’s announcement – a milestone in the government’s response to the pandemic’s toll on dairy — it’s time to look at where we are, and where we need to go.

We are grateful that the department found a way to provide some relief, and that many members of Congress worked with us to advocate vocally for dairy farmers.

And while the program will help many producers, its lack of fairness is a major concern for NMPF and many of its members. The payment is calculated based on only 5 million pounds of milk per farm during the period of July-December 2020. That level is well below the production of thousands of dairy farms, meaning many family dairy farmers will only receive a portion of the losses they incurred. Losses were felt by producers of all sizes and in all regions: It was a disaster in the truest sense of the word. And like most other disaster programs, this one shouldn’t be subject to such arbitrary low limits on assistance. We are already working with allies in Congress to further supplement USDA’s already announced funding.

Meanwhile, we still need to address the risk imbalance in the current Class I mover formula that was exposed by the pandemic. The proposed adjustment to the mover NMPF developed last spring was designed to account for past losses and to restore needed balance for farmers going forward. The COVID-19 pandemic is (we hope) a once-in-a-lifetime occurrence. But as we can now see, a large spread between Class III and IV milk prices is not, making a Class I mover fix essential. Along with more fully recouping last year’s losses, we look forward to advancing positive solutions to this and other federal-order issues.

NMPF applauds USDA’s and Congress’s many crucial efforts for dairy. But fair is fair. As the advocate for U.S. dairy farmers, we’re leading the fight for fairness. Our efforts, along with those from our member-allies across the dairy farmer community, have already yielded a lot. And they’re far from over.